Securities account UCC definition causing collateral description headaches
Running into issues with our UCC-1 filing where we're trying to perfect a security interest in investment accounts. The debtor has multiple brokerage accounts with different firms and I'm struggling with the proper collateral description for what constitutes a 'securities account' under UCC Article 9. Our counsel draft says 'all securities accounts of debtor' but the SOS rejected it saying the description is too broad. Has anyone dealt with securities account UCC definition issues? Do I need to list each individual account number or can I use a more general description? The loan documents reference specific account numbers but I'm not sure if that level of detail is required for the UCC filing itself. This is for a $2.8M credit facility secured by the debtor's investment portfolio.
37 comments
Join the conversation
Savanna Franklin
Securities accounts under UCC 9-102(a)(49) are pretty specific - it's an account maintained by a securities intermediary where financial assets are credited. Your description needs to be sufficient to reasonably identify the collateral but doesn't necessarily need every account number. Try something like 'all securities accounts maintained by debtor with [broker name] and all securities and other financial assets credited thereto' - that's usually specific enough.
0 coins
Juan Moreno
•This is exactly what we used on a similar filing last month and it went through fine. The key is identifying the intermediary if you know it.
0 coins
Sergio Neal
•Thanks, that makes sense. Do you know if I need to amend if the debtor opens new accounts with the same broker after filing?
0 coins
Savanna Franklin
•No amendment needed if your description covers 'all securities accounts' with that broker - future accounts would be covered automatically.
0 coins
Amy Fleming
Had this exact problem 3 weeks ago!! Our first filing got bounced because we just said 'investment accounts' which apparently isn't the right UCC terminology. Securities account has a very specific definition and you have to use the right language or some filing offices will reject it.
0 coins
Sergio Neal
•What language did you end up using that worked?
0 coins
Amy Fleming
•We went with 'all securities accounts of debtor and all securities entitlements, financial assets and other property credited thereto' - covers everything in the account plus the account itself.
0 coins
Alice Pierce
Been doing securities filings for 15 years and the collateral description is always tricky. The UCC definition of securities account is in 9-102(a)(49) but what really matters is making sure you capture both the account AND the contents. A lot of people forget about securities entitlements which are the actual rights to the securities in the account.
0 coins
Esteban Tate
•Wait, so if I just describe the securities themselves and not the account, that's not sufficient for perfection?
0 coins
Alice Pierce
•Right - with securities held through an intermediary, you need to perfect in the securities entitlements, not the underlying securities. That's why the account description matters.
0 coins
Sergio Neal
•This is getting complicated. Are there any tools that can help verify the collateral description is comprehensive enough?
0 coins
Ivanna St. Pierre
Actually just discovered Certana.ai's document verification tool last week when I was having similar issues with securities account descriptions. You can upload your loan agreement and draft UCC-1 and it automatically flags potential gaps in collateral coverage. It caught that my description missed 'securities entitlements' which would have been a perfection problem. Really simple to use - just upload the PDFs and it cross-checks everything.
0 coins
Sergio Neal
•That sounds helpful - does it specifically handle securities account terminology?
0 coins
Ivanna St. Pierre
•Yes, it seems to understand the UCC Article 9 definitions pretty well. Definitely saved me from a potential lien perfection issue.
0 coins
Elin Robinson
The SOS rejection probably means they want more specificity. Some states are really picky about securities account descriptions. What state are you filing in? That might affect what level of detail they expect.
0 coins
Sergio Neal
•Filing in Delaware. The rejection notice just said 'collateral description insufficient' which isn't very helpful.
0 coins
Elin Robinson
•Delaware usually accepts broader descriptions. Try adding the securities intermediary name and see if that helps.
0 coins
Atticus Domingo
Don't overthink this. I usually go with 'all securities accounts of debtor maintained by [intermediary name], including all securities entitlements and other financial assets credited to such accounts.' Simple and covers everything you need for perfection.
0 coins
Beth Ford
•This is the format we use too and never had issues with it.
0 coins
Sergio Neal
•Perfect, this gives me a good template to work with. Much clearer than trying to decode the UCC definitions myself.
0 coins
Morita Montoya
One thing to watch out for - if the debtor has accounts with multiple brokers, you might want to list them separately or use 'all securities accounts of debtor with any securities intermediary' to make sure you don't miss anything. Securities account UCC definition is specific enough that precision matters.
0 coins
Sergio Neal
•Good point - the debtor does have accounts with Schwab and Fidelity so I'll need to cover both.
0 coins
Kingston Bellamy
•Or just say 'all securities accounts of debtor' without naming specific intermediaries - that should cover accounts anywhere.
0 coins
Joy Olmedo
Be careful with overly broad descriptions though. Some filing offices are getting stricter about requiring reasonable identification of collateral. 'All securities accounts' might be too vague depending on your state.
0 coins
Isaiah Cross
•I think as long as you add 'and all securities entitlements and financial assets credited thereto' it shows you understand what you're trying to perfect in.
0 coins
Sergio Neal
•That makes sense - shows the filing office you know what constitutes the collateral under Article 9.
0 coins
Kiara Greene
Had a similar securities account filing issue last year and ended up using Certana.ai to double-check my collateral description against the loan docs. It flagged that I was missing coverage for cash equivalents in the accounts which could have been a problem. Really helped avoid potential perfection gaps.
0 coins
Evelyn Kelly
•That's smart - easy to miss those details when you're focused on the securities themselves.
0 coins
Sergio Neal
•Seems like that tool could save a lot of back-and-forth with filing rejections.
0 coins
Paloma Clark
Bottom line - securities account UCC definition under 9-102(a)(49) is 'an account maintained by a securities intermediary in which a financial asset is credited to the account holder.' Your collateral description needs to capture both the account relationship and the assets in it. Don't just describe the securities, describe the entitlements to them.
0 coins
Sergio Neal
•This is really helpful - I think I was missing the distinction between the securities and the entitlements.
0 coins
Paloma Clark
•Exactly - it's a subtle but important difference for perfection purposes. The entitlements are what you actually have rights in when securities are held through an intermediary.
0 coins
Heather Tyson
Update - tried the revised description 'all securities accounts of debtor maintained with Charles Schwab & Co. and The Fidelity Investments, including all securities entitlements, financial assets, and other property credited to such accounts' and it was accepted! Thanks everyone for the help understanding the securities account UCC definition requirements.
0 coins
Juan Moreno
•Great outcome! That description covers all the bases.
0 coins
Savanna Franklin
•Perfect - that's exactly the level of specificity most filing offices want to see.
0 coins
Raul Neal
•Glad it worked out. Securities account filings can be tricky but once you understand the terminology it gets easier.
0 coins
Giovanni Ricci
Great to see this resolved! For anyone else dealing with securities account UCC issues, I've found it helpful to remember that the key is capturing three elements: (1) the account itself, (2) the securities entitlements (your rights to the securities), and (3) any other financial assets in the account like cash or money market funds. The UCC definition in 9-102(a)(49) focuses on the intermediary relationship, so naming the broker/custodian when known really helps with specificity. Also worth noting that if you're securing a revolving facility where the debtor might move accounts around, you might want broader language, but for term loans with identified accounts, the specific approach usually works better with filing offices.
0 coins